Litigation Funding – New Government Review

Thursday 28th February 2019

The Government changed the way professional claims could be funded in the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO Part 2). After 1 April 2013 in ‘no win no fee’ actions it became impossible to recover lawyer’s success fees and also a ban was placed on recovery of insurance premiums for After the Event (‘ATE’’) legal expenses insurance. Both become payable by the winning claimant in a claim against a professional.

This change has proved controversial because costs have dramatically increased to fund successful claims. Individuals and businesses now have to pay the success fees and ATE premiums out of their damages in practice. The loss can amount to many thousands of pounds.

On 7 February 2019 the Government published a review of LASPO Part 2 having considered whether or not to make any changes. No changes were recommended.

The review states at paragraph 106:

‘A professional negligence claimant lawyers’ representative group [PNLA] argued that there was a lack of evidence and flaws behind Sir Rupert’s methodology in his original report regarding professional negligence, and that the “one size fits all” approach of LASPO should not apply to these claims. They argued for the extension of QOCS to these claims and provided some data, which suggested that claims volumes had dropped post LASPO indicating, they suggested, an access to justice problem.

Defendants generally disputed this, arguing that professional negligence claims did not feature an ‘asymmetric relationship’ and that there were often professional body complaints procedures and ombudsmen for many of the relevant professions.

The representative body for professional negligence lawyers would also like greater awareness of the professional negligence adjudication scheme. This is a voluntary process which seeks to resolve disputes in a faster and more efficient manner than litigation, modelled on the adjudication process for construction disputes.’